US oil returns to the era of $100! Trump's "daily posts" are no longer able to save the market

Notice that since the United States and Israel launched a war against Iran, U.S. oil prices closed above $100 a barrel for the first time during Monday's trading session. At the same time, President Trump threatened to further escalate attacks, targeting critical energy infrastructure. West Texas Intermediate (WTI) crude oil futures rose more than 3%, closing just below $103 per barrel, hitting the highest level since July 2022. The $100 price level is a key threshold closely watched by traders and other market participants. Meanwhile, global benchmark Brent crude is poised to see its largest monthly gain since March, while the average price of retail gasoline in the U.S. hovers around $4 per gallon. The Middle East conflict has disrupted global markets, sparking concerns about skyrocketing inflation and slowing economic growth occurring simultaneously. The vital Strait of Hormuz, aside from a few ships, has cut off almost all traffic, leading to a paralysis in energy shipping. Uncertainty remains widespread - any significant damage to the Persian Gulf energy infrastructure could lead to further price hikes and increase costs for consumers and businesses. Frank Moncam, Head of Macro Trading at Buffalo Bayou Commodities, stated that "the $100 level is not just a symbolic threshold for the energy market, but also for cross-asset investors," as he believes investors see it as a signal of rising risks of inflation, policy volatility, and a weakening currency. Fuel prices have been soaring. According to data from the American Automobile Association (AAA), as of Sunday, the average retail gasoline price in the U.S. was $3.99 per gallon. If pump prices break through the $4 mark, it will be the first time since 2022, potentially increasing pressure on the Republican Party leading up to the midterm elections as concerns about living costs become a key factor in determining the election outcome. U.S. Crude Oil Prices Break Key $100 Level In a post on Truth Social, Trump stated that if an agreement with Iran is not reached in the short term, and "if the Strait of Hormuz does not immediately 'Open for Business,' we will bomb and completely destroy all their power plants, oil wells, and Kharg Island, to end our wonderful 'residency' there." As the conflict enters its fifth week, the latest U.S. threat represents a further escalation in the situation. Despite diplomatic efforts by Washington last week and separate talks held in Pakistan over the weekend, it still threatens future production prospects. Iran's oil exports rely almost entirely on the small outpost of Kharg Island in the Persian Gulf, which handles about 90% of the country's crude loading tasks. Claudio Galimberti, Chief Economist at Rystad Energy, said that WTI closing above $100 "clearly indicates that we are not in a de-escalation mode, quite the opposite." Despite this, he believes that both Iran and the U.S. "have an incentive to reach a ceasefire. I think we should not underestimate the possibility of reaching targets relatively quickly." On Monday, as more U.S. troops arrived in the region and Iran-backed Houthi forces in Yemen joined the war, crude oil prices were also supported. Traders warn that if the conflict does not end soon, energy prices will see further large-scale increases. Treasury Secretary Bennett said in an interview on Monday that with time, the U.S. will regain control of the Strait of Hormuz, whether through U.S. escorts or multinational escorts, ensuring freedom of navigation. However, traders remain skeptical. "Their 'verbal pressure every day' strategy is outdated," said Darrell Fletcher, Managing Director of Commodities at Bannockburn Capital Markets. In normal times, the Strait of Hormuz carries about one-fifth of the world's oil flow. Iran has taken action to legitimize its control over this artery, prohibiting most ships from passing through while allowing a few ships (including those from Pakistan, Thailand, and Malaysia) to pass. In a symbolic move, two Chinese state-owned container ships were attempting to exit the Strait of Hormuz on Monday. Iranian War Drives Oil Prices Soaring Fletcher stated that the light holiday trading on Monday also made the market more susceptible to extreme price fluctuations. In thin liquidity, Brent crude futures experienced significant fluctuations on Monday, with traders increasingly opting to stay on the sidelines to avoid extreme price volatility driven by headline news. The near-term May futures, before the contract expiration on Tuesday, fluctuated as investors liquidated their positions, ultimately closing around $113 per barrel. Major banks have been working to calculate how the war and its prices may evolve. last week stated that, if the conflict drags on until June and the Strait of Hormuz remains closed, in a scenario with a 40% probability, oil price futures could reach $200 per barrel.